Adolescents who attend special education for behavioural problems (SEB) and adolescents who live in a residential youth care institution (RYC) are characterised by behavioural disorders and problematic family backgrounds and have an increased risk for substance use. Though it is likely that the high rates of substance use in SEB/RYC settings might be inherent to the risk profile of these adolescents, little is known about the actual role the risk profile has in explaining substance use. The present study examined the extent to which the elevated risk of substance use in SEB/RYC can be explained by high levels of individual, family, and peer risk indicators that are known to characterise their risk profile. Self-report questionnaires from 531 adolescents in RYC (50 % male; mean age 14.7) and 603 adolescents in SEB (81 % male; mean age 14.1) were compared with information from 1,905 adolescents attending special education for students with learning disabilities (SEL) (56 % male; mean age 14.1). Results show that adolescents in SEB/RYC reported higher levels of daily smoking, weekly alcohol consumption, cannabis and hard drug use, as well as greater prevalence of individual, family and peer factors. Though individual, family and in particular peer risk indicators all explain some of the variance in substance use, the differences between adolescents in SEB/RYC compared with SEL remained significant and substantial, with the exception of heavy alcohol consumption. These findings suggest that deviant peer affiliation, in particular, plays a role in explaining high substance use levels in SEB/RYC and those factors relevant to the residential settings and special education schools might also contribute to substance use in these high-risk groups.